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PCA802S - PROCUREMENT AUDITS - 1ST OPP - NOV 2022 |
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nAmlBIA UnlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF MARKETING AND LOGISTICS
QUALIFICATION: POST GRADUATE DIPLOMA: PROCUREMENT MANAGEMENT
QUALIFICATION CODE: 08PDPM
COURSE CODE: PCA802S
LEVEL: 8
COURSE NAME: PROCUREMENT AUDITS
SESSION: NOVEMBER 2022
PAPER: THEORY
DURATION: 3 HOURS
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUl;STION PAPER
EXAMINER(S} MS. SELMA KAM BONDE
MODERATOR: MS. COLENE CLOETE
INSTRUCTIONS
1. Answer ALL the questions.
2. Write clearly and neatly.
3. Number the answers clearly.
THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
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SECTIONA: MULTIPLE CHOICE(40 MARKS)
QUESTION 1
There are twenty (20) Multiple-choice questions with several possible choices each. Choose
the best possible answer, for example 1.1 A. Each question is equivalent to 2 marks. Only
write the letter next to the correct answer.
1.1 What is the primary purpose of developing an understanding of client internal controls
in the planning phase?
(2 Marks)
a) To measure the possibility of fraud
b) To document the control risk
c) To assessthe operational efficiency of the client
d) To determine the planned level of substantive tests
e) To comply with terms of the engagement letter
1.2 When the auditor increases the assessedlevel of risk that the client's internal controls
will not prevent or detect a material error, the auditor most likely would?
(2 Marks)
a) Increase allowable audit risk
b) Decrease the level of materiality
c) Increase planned substantive tests
d) Perform fewer tests of controls
1.3 Auditors are responsible for determining whether financial statements are materially
misstated, so upon discovering a material misstatement they must bring it to the
attention of:
(2 Marks)
a) CPBN
b) The Ministry of finance
c) Procurement function
d) The client's management
1.4 Why do auditors establish a preliminary judgment about materiality?
(2 Marks)
a) To determine the appropriate level of audit experience required for the work.
b) So that the client can know what records to make available to the auditor.
c) To plan the appropriate audit evidence to accumulate and develop an overall audit
strategy.
d) To finalize the assessment of control risk.
1.5 Your organisation has recently transformed its purchasing process from a manual
processto a computerised system. Which of the following is a probable result associated
with transformation to the new automatic system?
(2 Marks)
a) Processing errors are increased
b) The organisations risk exposures are reduced
c) Processing time is increased
d) Traditional duties are less segregated
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1.6 Inherent risk and control risk differ from detection risk in that inherent risk and control
risk are?
(2 Marks)
a) Elements of audit risk while detection risk is not.
b) Changed at the auditor's discretion while detection risk is not.
c) Considered at the individual account-balance level while detection risk is not.
d) Functions of the client and its environment while detection risk is not.
1.7 In designing written audit programs, an auditor should establish specific audit objectives
that relate primarily to the?
(2 Marks)
a) Timing of audit procedures.
b) Cost-benefit of gathering evidence.
c) Selected audit techniques.
d) Procurement records assertions.
1.8 If internal control is properly designed, the same employee should not be permitted to?
(2 Marks)
a) Sign checks and cancel supporting documents.
b) Receive merchandise and prepare a receiving report.
c) Prepare disbursement vouchers and sign checks.
d) Initiate a request to order merchandise and approve merchandise received.
1.9 Which of the following procedures would provide the most reliable procurement audit
evidence?
(2 Marks)
a) Inquiries of the client's internal audit staff held in private.
b) Inspection of prenumbered client purchase orders filed in the vouchers payable
department.
c) Analytical procedures performed by the auditor on the entity's inventory records.
d) Inspection of a summary of transactions obtained directly from the client's integrated
system.
1.10 The standard of fieldwork states that sufficient competent evidential matter may, in
part, be obtained through inspection, observation, inquiries, and confirmations, to afford a
reasonable basis for an opinion regarding the financial statements under examination. The
evidential matter required by this standard may, in part, be obtained through?
(2 Marks)
a) Analytical procedures.
b) Auditor working papers.
c) Review of the internal control.
d) Proper planning of the audit engagement
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1.11 A good audit report must at least meet one of the following qualifications:
(2 Marks)
a) It should offer constructive and timely suggestions to the Management.
b) It should not point out mistakes.
c) It should not be based on factual information.
d) Should indicate who should be arrested for misappropriation of state funds
1.12 When issuing unqualified opinion, the auditor who evaluates the audit findings
should be satisfied that the:
(2 Marks)
a) Amount of known miss-statement is documented in working papers.
b) Estimates of the total likely misstatement are less than materiality level.
c) Estimated of the total likely misstatement is more than materiality level.
d) Estimates of the total likely misstatement cannot be made.
1.13 Which of the following is not a type of audit opinion?
a) Qualified
b) Adverse
c) Reserved
d) Disclaimer
(2 Marks)
1.14 What type of opinion is issued when the auditor, having obtained sufficient
appropriate audit evidence, concludesthat misstatements, individually or in the
aggregate, are both material and pervasive to the procurement records?
(2 Marks)
a) Adverse.
b) Disclaimer.
c) Reserved.
d) Qualified.
1.15 Before the work of audit is commenced, the auditor plans out the whole of
audit work is known as____
(2 Marks)
a) Audit scope
b) Audit guidelines
c) Audit risk
d) Audit program
1.16 For what primary purpose does the auditor obtain an understanding of the entity and
its environment?
(2 Marks)
a) to determine the audit fee
b) to decide which facts about the entity to include in the audit report
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c) to plan the audit and determine the nature, timing, and extent of audit procedures
to be performed
d) to limit audit risk to an appropriately high level.
1.17 An unqualified audit report provides assurance to users of the procurement
information that:
(2 Marks)
a) the internal controls operated within the company have been effective during the
past year.
b) the internal auditors have operated efficiently and effectively during the past year.
c) the directors have run the company efficiently and effectively.
d) none of the above
1.18 Auditors working papers should include?
(2 Marks)
a) All working papers prepared during a previous audit.
b) Documentation substantiating the examination and evaluation of the adequacy and
effectiveness of the system of internal control.
c) Copies of all procedures that were reviewed during the internal audit.
d) Copies of all source documents examined in the course of the internal audit
1.19 Which one of the following is an audit objective?
a) Recalculate each month's reconciliations.
b) Analyse the pattern of any payment duplication of purchase orders.
c) Observe the functions of the procurement process.
d) Evaluate whether procurement processes are adequately safeguarded.
(2 Marks)
1.20 Which of the following are elements included in the control environment described
in the COSOinternal control framework?
(2 Marks}
a) Integrity and ethical values, management's philosophy and operating style, and
human policies
b) Organisational structure, commitment to competence and planning.
c) Competence of personnel, backup facilities, laws, and regulations.
d) Risk assessment, assignment of responsibility and human resource practices
SECTIONA: 40 TOTAL MARKS
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SECTION B: STRUCTURED QUESTIONS
QUESTION 2
According to Ferguson (2018), public procurement projects account for up to 50 per cent of
the annual government spending worldwide. Some of the largest documented schemes of
corruption occur in this sector. Operation Car Wash (the Odebrecht case) was described by
the United States Department of Justice as" the largest foreign bribery case in history". This
case implicated officials in more than twelve countries and led to prosecution and conviction
of several company officials and external parties (Lessa,2017).
2.1 Briefly discuss the types and role of procurement internal controls required to safeguard
against illicit behaviour in a procurement environment (make use of relevant example)?
{30 Marks)
QUESTION 3
Public procurement is one of the government activities most vulnerable to corruption. In
addition to the volume of transactions and the financial interests at stake, corruption risks
are exacerbated by the complexity of the process, the close interaction between public
servants and businesses, and the multitude of stakeholders. Unethical practices can occur in
all phases of the procurement cycle. However, each phase may be prone to specific kinds of
integrity risks.
3.1 Briefly discuss the integrity risks prone to the phases of the procurement process (make
use of practical examples)?
{30 Marks)
SECTION B: 60 TOTAL MARKS
GRAND TOTAL:100
END OF QUESTION PAPER
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